The bank guarantee is an independent contract enforceable on its own terms, and the obligation of the bank to pay would be subject to limited exceptional circumstances such as fraud, irretrievable injustice, or special equities.

SWATANTER KUMAR, J.

( 1 ) PUNJ Lloyd Insulations Limited is a company duly registered under the companies Act, 1956 filed a suit for injunction praying for grant of a decree for permanent injunction in favour of the plaintiff and against defendant no. 2, restraining him from encashing the bank guarantee dated 8. 11. 99 which was valid upto 30th September, 2001. Separate injunction is prayed for against the bank/defendant no. 1 for making any payment under the said bank guarantee to defendant no. 2. In the plaint it was stated by the plaintiff that they had entered into an agreement for supply and application job of thermal insulation to the equipment and pipe work for the Paradeep Phasphatic Fertilizer of the defendant no. 2. On 6. 11. 99 the work was awarded to the plaintiff. The plaintiff was required to furnish bank guarantee towards mobilisation advance and performance of the contract to the extent of 10% and 5% respectively of the agreed value of contract which was Rs. 2. 50 crores. The plaintiff furnish two bank guarantees issued by defendant no. 1 towards the mobilisation advance and the performance bank guarantees valid upto 17th May, 2000 with invocation period upto 17. 11. 02. It is the case of the plaintiff that during the execution of the work defendant no. 2 changed the scope of the work and the work material requirement was revised by the plaintiff from time to time to suit the need of defendant no. 2 in the suit. The work done by the plaintiff beyond the scope of the contract was duly informed to the concerned defendant and financial implication in the performance of extra item was agreed between the parties. The plaintiff s claim to have performed the contract to the satisfaction of the concerned defendant and the entire work was completed by the plaintiff on 30th march, 2000. Due to the amendments to the scope of the work total value of the work was increased to Rs. 2,73,28,681. 47 which was also certified by the defendants. In fact, on 12th April, 2000 the defendant issued a certificate of completion of work and it was certified that the work and the project was carried out in a very professional manner with intricate planning. Complete amount of mobilisation advance was duly recovered by defendant no. 2 and the plaintiff requested defendant no. 2 to return the bank guarantee towards mobilisation advance duly discharged by defendant no. 2. The plaintiff had also requested for release of the balance payment. The mobilisation bank guarantee was returned to the plaintiff on 17th May, 2000. Vide letter dated 13th June, 2000 the value of the contract was increased and the plaintiff requested defendant no. 2 for release of its balance payment of Rs. 84,75,437. 75. After various meetings a sum of Rs. 25 lacs was released on 1st December, 2000 but the balance amount of Rs. 8,12,421. 87 was not paid. The plaintiff had been writing to the defendants for release of the payments and had so stated vide their letter dated 23rd July, 2001. It was also requested that the bank guarantee which had been submitted toward 12 months performance period, which had expired on 31st March, 2001 be also returned duly discharged to the plaintiff. But defendant no. 1 on 30th July, 2001 found that the defendant no. 2 had made a claim dated 26th July, 2001 for encashment of the bank guarantee alleging that the plaintiff had failed to fulfill the terms of the purchase order in question. According to the plaintiff, the defendants had no right whatsoever keeping in view the certificate, release of mobilisation advance, settlement of other accounts and keeping in view that still some amount was due from the defendants there was no justification whatsoever with the defendants to encash the bank guarantee and in any case there could be no breach of terms and conditions of the contract as the letter of invocation was beyond the terms of the bank guarantee. On these facts the suit for injunction was filed. The suit was contested by the defendants p

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